Articles Posted in Environmental

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For contractors, keeping track of the various provisions and requirements of federal statutes such as the federal Clean Air Act (CAA) while also jumping through the many hoops of local permitting can be quite an achievement in and of itself. smellyBut as a recent case shows us, the “litigative shield” of full CAA compliance can mean little in the face of state common law.  In a noteworthy decision issued on November 2, 2015, the U.S. Court of Appeals for the Sixth Circuit ruled, in a federal class action complaint seeking compensatory and punitive damages from a local distillery for negligence, nuisance and trespass, that the “Federally Enforceable District Origin Operating Permit issued and overseen by the Louisville Metro Air Pollution Control District” under which the defendant is operating was not preempted by the CAA. Let Merrick, et al., v. Diageo Americas Supply, Inc. serves as a cautionary note to contractors, even full compliance with the federal CAA may not eliminate their exposure to claims under the states’ common laws.

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WaterThe U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers’ (Corps) have finalized their much-discussed joint “waters of the United States” definition and rule. This regulatory definition controls the scope and scale of these agencies’ regulatory authority under the federal Clean Water Act (CWA). It was slated to go into effect August 28, 2015. However, on August 27, 2015, the U.S. District Court for the District of North Dakota, in State of Ohio, et al., v. U.S. Army Corps of Engineers, issued a preliminary injunction staying implementation of the new rule in the States of North Dakota, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota, Wyoming, and New Mexico pending further proceedings. The Court also decided that the stay is limited to these states. Then, on October 9, 2015 the U.S. Court of Appeal for the Sixth Circuit, in a separate proceeding, entered a nationwide stay of the rule to give the court additional time to determine if it, rather than the district courts, has jurisdiction to hear these appeals. Challenges to the rule are pending in other district courts as well. The litigation already engendered by this new rule indicates that the rule will be before the federal courts and there will be significant uncertainty for some time to come.

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Acquiring adequate insurance coverage against environmental risks, in particular the spill or release of pollutants or contaminants in day-to-day operations, is important to many construction businesses confronting the requirements of environmental regulation. For example, EPA’s hazardous waste rules require permittees (at both the state and federal level) to demonstrate financial responsibility for the operations of these facilities, including site closure and post-closure care, and coverage for sudden and accidental discharges. This requirement can be satisfied by proof of acceptable insurance coverage. In addition, having such insurance often assists companies facing the challenge of an extensive and prolonged Superfund cleanup. Many courts have ruled that the receipt of a Superfund Notice Letter from EPA triggers the responsibility of the insurer to provide the coverage in the policy.

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On October 9, 2015, the U.S. Court of Appeals for the Sixth Circuit, in a split decision, stayed the implementation of the new rule redefining the regulatory definition of “waters of the United States” (the Rule), which is the linchpin of much of the federal government’s jurisdiction under the Clean Water Act (CWA). The case is State of Ohio, et al., v. U.S. Army Corps of Engineers.

The Rule, promulgated by the Environmental Protection Agency (EPA) and Corps of Engineers, was published in the Federal Register on June 29, 2015, and was to be effective on August 28, 2015. The Rule has been challenged and defended in many federal district and appellate courts, and the four actions that were considered by the Sixth Circuit followed the decision of the Judicial Panel on Multi-District Litigation to consolidate these appeals in the Sixth Circuit. The petitioners in these four actions also requested that the Sixth Circuit stay the Rule while it determines whether it even has jurisdiction over this case, given the complexity of the CWA’s provisions regarding judicial review.

The Sixth Circuit agreed that it made sense to do so, to allow the parties to submit briefs on the Sixth Circuit’s jurisdiction, which the court will review carefully, and the Sixth Circuit also indicated that its decision should be made “in a matter of weeks.”

In issuing the stay, the Sixth Circuit noted that it had some misgivings about the Rule and the EPA’s and Corps of Engineers’ processes by which the Rule was promulgated. In any case, a stay will “temporarily silence the whirlwind of confusion that springs from uncertainly about the requirements of the new Rule,” honors the “policy of cooperative federalism,” and will restore “uniformity of regulation under the familiar, if imperfect, pre-Rule regime, pending judicial review.” As a result of this action, the status quo will be maintained pending further review.

Additional Source:  80 F.R. 37054 (Jun. 29, 2015)

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The U.S. Court of Appeals for the Second Circuit has issued a ruling that EPA’s Clean Water Act (CWA) Vessel General Permit (VGP), which regulates the discharge of ballast water from ships, was promulgated in violation of the Administrative Procedure Act (APA), and must be remanded to the agency.  The case is National Resources Defense Council, et al. v. EPA, which was decided on October 5, 2015.

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The U.S. District Court for the Southern District of West Virginia has ruled on the government’s motions to dismiss the plaintiffs’ constitutional arguments in a new Clean Water Act (CWA) administrative compliance order matter.  The plaintiffs, West Virginia property developers, were alleged to have violated the CWA by illegally discharging dredge and fill material into Neal Run, a tributary stream that flows into the “waters of the United States”.  EPA issued a CWA Compliance Order under Section 309 of the CWA, requiring the plaintiffs to restore the property to “pre-disturbance grade and conditions”.  The plaintiffs, who purchased the property out of the bankruptcy estate of the previous owner, then filed a lawsuit seeking declaratory and injunctive relief from the order under the Administrative Procedures Act (APA) or an injunction halting its enforcement.  They alleged that the order violated both their procedural and substantive due process rights.  The case is Foster, et al., v. EPA, et al.

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On September 30, 2015, the U.S. District Court for Wyoming granted requests for a preliminary nationwide injunction against the implementation of the Department of the Interior’s (DOI) Bureau Of Land Management (BLM) rules that apply to hydraulic fracturing on Federal and Indian lands.  The lead case is State of Wyoming v. U.S. Department of the Interior.

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On September 29, 2015, the U.S. Court of Appeals for the DC Circuit issued a unanimous ruling  affirming the district court’s rejection of a lawsuit filed by the Sierra Club against the U.S. Army Corps of Engineers in which the Sierra Club argued that the federal government was obliged to conduct a National Environmental Policy Act (NEPA) analysis of the entirety of an 580 mile oil pipeline constructed by Enbridge Pipelines (FSP), LLC.  The case is Sierra Club v. U.S Army Corps of Engineers, et al.

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The U.S. Army Corps of Engineers often exercises its Clean Water Act (CWA) Section 404 permitting authority through administrative “jurisdictional determinations”, in which the agency usually determines whether a proposed project involves the deposit or disposal of dredge and fill material into wetlands deemed to be “waters of the United States” subject to the jurisdiction and control of the Corps of Engineers.  These determinations can be controversial, particularly when the Corps of Engineers’ authority is based upon laws, rules and administrative practices that may not be clear.  Recently, two U.S. Courts of Appeals have issued conflicting rulings with respect to the issue whether the Corps of Engineers jurisdictional determinations are “final agency rules” that can be promptly reviewed in federal court in the wake of the Supreme Court’s unanimous decision in the 2012 case of Sackett v. EPA, 132 S.C.t. 1367 (2012).  The two rulings are Belle Co. LLC v. US Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014), and Hawkes Co., Inc. v. U.S. Army Corps of Engineers, 782 F. 3d 994 (8th Cir. 2015).  These rulings take on added significance because of the new rules issued by EPA and the Corps of Engineers redefining the concept of “waters of the United States”, which is the linchpin of federal regulatory power under the CWA.  These rules were made effective on August 28, 2015, and many challenges have been filed in both federal district courts and the Court of Appeals.

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On September 21, 2015, the U.S. Court of Appeals for the Seventh Circuit issued an important Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), cost recovery lawsuit ruling relating to a contractual release of liability that pre-dated CERCLA.  The case is The Peoples Gas Light and Coke Company v. Beazer East, Inc.

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